fighting inflation

[Brad DeLong]

>Seth Ackerman wrote:
>
>>I like this line from Stanley Fischer...
>>
>>---
>>
>>In 1982 when you
>>looked at the numbers you couldn't tell that Korea would do better
>>than Latin American countries during the debt crisis, but of course
>>Korea was so much more capable of taking hard, dramatic action. I
>>suspect that China is more like that in terms of the political system
>>and the determination of the team when they see things coming.
>>
>>Remember [the 1989] Tiananmen [Massacre] was politically awful but
>>that was the period in which they dealt with inflation - they just dealt
>>with it.
>
>I heard Fischer give a lightly attended press conference at the 
>WB/IMF annual meeting in 1989. At one point, he compared the 
>prospects for Soviet reform with China's. One crucial difference, he 
>said, was that when China started its reforms the state was totally 
>in control - unlike Russia, where it was already decaying. Smart 
>guys like Fischer know just how important state coercion is to the 
>creation of "free" markets.
>
>Doug

Fischer would put it differently: that strong state/weak state has 
little to do with tyranny/democracy, and even with 
liberal/collectivist.

In fact, in some ways the democratic liberal "night watchman" state 
is the strongest of all: it must protect property, it must enforce 
contracts, it must constrain the power of local notables, and most 
important of all it must severely limit corruption over its own 
servants.

In Stan's view, Russia's problem was that the state was too weak, not 
that it was too democratic...

Brad DeLong